Exports to India on the decline

Exports to India on the decline

Exports to India declined 19 percent year-on-year to $456.63 million in fiscal 2013-14 mainly due to a slowdown in shipment of garment items that enjoy duty-benefit in the neighbouring market.

In fiscal 2012-13, exports to India were worth $563.97 million, according to Export Promotion Bureau.

But exports were supposed to increase as the Indian government offered Bangladesh duty-free benefit for all products except 25 alcoholic and beverage items since November 2012. The duty benefit came following then Indian prime minister Manmohan Singh's visit to Bangladesh in September the same year.

As a result of the duty benefit, exports had started increasing at the end of fiscal 2012-13.

But shipments began to fall in 2013-14 due to a 12.5 percent countervailing duty on Bangladeshi garments.

Because of the countervailing duty, Bangladeshi exporters lost competitiveness to the Indian garment manufacturers.

The main reason behind the Indian duty benefit was to narrow the widening trade gap between the two countries. The trade balance is heavily tilted towards India.

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Generally, India exports goods worth more than $5 billion a year to Bangladesh through formal channels, and it is believed products worth another $5 billion enter Bangladesh through informal channels.

Two reasons -- tariff, non-tariff and para-tariff barriers and the Lilliput issue -- have reduced Bangladesh's exports to India, said Abdus Salam Murshedy, a former president of Bangladesh Garment Manufacturers and Exporters Association.

Twenty-two garment exporters of Bangladesh have been facing uncertainty for years in receiving payments worth $5 million from Lilliput, a leading kids wear brand in India.

Besides the 12.5 percent countervailing duty, there are some non-tariff and para-tariff barriers for exporting garment items to India, said Murshedy who has long been doing business with India.

India takes a long time for laboratory tests of Bangladeshi goods, he added.

“The visa problem is a long pending issue. We should resolve the issue as soon as possible to increase our garment business with India,” he said. “We need multiple-entry visas to grab more market share in India.”

Murshedy said India can become the second biggest apparel market for Bangladesh after the EU as the demand for Bangladeshi apparel items among the growing Indian middle class is high.

Multinational retail chains such as Walmart, Gap and H&M are opening stores in India, which might be an opportunity for Bangladesh as well, he said.

In fiscal 2013-14, Bangladesh exported apparel items worth $96.26 million to India, registering a 21.86 percent growth from the previous year, according to EPB.

In 2012-13, apparel items worth $75.21 million were shipped to India, with a 63.84 percent growth year-on-year.